WTO accession fruitless without massive policy reforms by govt
The Bahamas’ accession to the World Trade Organization (WTO) would be fruitless without the government making massive policy reforms that would improve this country’s business environment.
Those were the sentiments of Ramesh Chaitoo, a trade and investment consultant with global forecasting and quantitative analysis firm Oxford Economics; and Lloyd Barton, Oxford Economics’ head of global Trade, who spoke about their findings in a report on The Bahamas’ accession to the WTO at the Bahamas Chamber of Commerce and Employers’ Confederation’s (BCCEC) Power Breakfast yesterday.
The Oxford Economics WTO Impact Assessment report, which was commissioned by the BCCEC, explains that while accession to the WTO could be beneficial to The Bahamas, it will not spur economic growth without wide-reaching policy reforms.
“Overall, our simulation results strongly support the conclusion that the best outcome for the Bahamian economy would be for policymakers to pursue WTO accession within a broader policy reform agenda aimed at improving the local business environment,” the report states.
The report explains that countries that adopted a WTO trade environment found that it led to an increase in government transparency, policy reform and “predictability of the regulatory framework and policies”.
Chaitoo said many of the countries that have not yet joined the WTO are failed states or countries led by terrorist groups. Many regimes uninterested in joining the WTO do not want the structural changes that will bring about transparency and predictability because they create an environment that is not conducive to corruption.
While there has been much concern about WTO accession tanking businesses due to the reduction in protective tariffs, Chaitoo and Barton insist that The Bahamas’ WTO negotiating machinery has to put forth the best offer for The Bahamas in the context of the economy and implement incentives that will help local businesses to grow, while decreasing the massive subsidies offered to large foreign direct investors that can last as much as three decades.
The report notes that joining the WTO is not a quick fix for a country’s economy. It further notes that while in its accession scenarios there will be growing pains for The Bahamas as WTO members, in the long term the economy is expected to grow.
“What is clear from our study is that WTO accession alone will not be a panacea for the current problems facing the Bahamian economy,” the report states.
“In order to achieve a sustainable acceleration of growth, policymakers need to embark on a more ambitious and broad-based reform agenda to improve the domestic business environment.
“Another lesson is that the government needs to fully understand the technical and legal obligations that they are undertaking and that phased in tariff cuts are possible, technical support for implementation is available and good use must be made of these.”